From HOPE VI to HOPE SICK?

A federal program that was supposed to improve the worst of the nation's public housing gets hijacked by private developers and government bureaucrats.

SABRINA L. WILLIAMS

This article is from the July/August 2003 issue of Dollars and Sense: The Magazine of Economic Justice available at http://www.dollarsandsense.org/archives/2003/0703williams.html


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This article is from the July/August 2003 issue of Dollars & Sense magazine.

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These buildings are not a problem. They say that everything's falling apart and that's not true. We don't know where anyone is going with the relocation. There isn't really any place to go. No affordable apartments. They also say that the new houses are good for mixing the community—low-income and higher. But we can't afford the houses, and the new apartments are not in the same place as they [the houses] are anyway. — JC, Los Angeles resident

It's not that HOPE VI is bad in itself. It's the way it's being done. — DC, New Haven resident

In the summer of 1998, Julia Chesson began making a series of frantic calls to various national advocacy organizations. Always, her question was "Can you help me save my home?" Hers was one of the last families living at College Homes in Knoxville, where 319 units were already cleared and ready for demolition. She lived in what had been a public-housing community of low-rise, mid-century brick apartments with courtyards. Yes, there was some crime and, yes, there was some blight; she wanted those issues addressed. But, "it wasn't the kind of run-down housing you see on the news." She had already been working on a steering committee with other residents and the housing authority to resolve the development's problems. In retrospect, she wondered, "Wasn't that the way to go—participate in the process?"

What she found was that her participation didn't count for much. As the name indicates, College Homes was located near a local college and state university—prime real estate. Residents had worked to help craft the plan for revitalization of their homes, but, one day, Julia and other residents attended the scheduled committee meeting where an attorney, an architect and housing authority staff informed them that their homes would be demolished under a federal program known as HOPE VI. The 320 units were to be replaced by 149 houses for sale (which they couldn't afford) and about 50 mixed-income rental duplexes. After exhausting all legal challenges, Julia and a few other families decided to stay in their homes and refused to leave when formally evicted. After several days, the other families relented, but Julia and her daughters remained until the fall of 1998 when under a court order, sheriffs' deputies physically removed them from the property.

HOPE VI was established in 1992 and is administered by the U.S. Department of Housing and Urban Development (HUD). The name is sometimes an acronym for "Housing Opportunities for People Everywhere," although HUD formally calls it the Revitalization of Severely Distressed Public Housing program or alternately "a chapter in the American Success Story that is public housing." Few would argue with the need to invest in upgrading and, in some cases, rebuilding the nation's stock of public housing. But in a political context of privatization and deregulation, HOPE VI has failed to fulfill this promise. As a result, residents routinely regard it as simply a large-scale demolition program. And in its wake, countless low-income families have lost their homes; these families are now left to hunt for affordable apartments that don't exist, in neighborhoods no better off than they were before this newest incarnation of urban "renewal."

The Therapy's Origins

In August 1992, Congress created a commission to craft recommendations on improving public housing. The landscape the National Commission on Severely Distressed Public Housing (NCSDPH) was charged with surveying included over 1.2 million units of public housing in the HUD inventory (out of the 113 million total units of housing in the United States). At the time, there were 2.8 million people who called the actual buildings of public housing home, while another 1.8 million used vouchers to secure subsidized private housing. And HUD reported that approximately 5.4 million families were in need of housing assistance.

The NCSDPH determined that 86,000 public housing units—or only 6%—were severely distressed. The commission concluded that public housing authorities (PHAs), the agencies that own and operate all public housing, needed to move away from a "bricks and mortar" approach and look at all aspects of housing: social, physical, and economic. While the commission called for revitalization of the most distressed public housing developments by providing grants and flexibility to PHAs to address the housing and social service needs of residents living in those developments, it recommended that demolished units be replaced on a one-for-one basis and never suggested that higher-income renters be substituted in the new units.

Following these recommendations, Congress appropriated the first HOPE VI funds that same year, and HUD began making grants to PHAs. For its first seven years, HOPE VI was operated solely by congressional appropriation. In other words, it was not guided by any consistent statutory authority: its basic tenets could be changed each year. It was not until the FY 1999 appropriation that Congress actually authorized HOPE VI under Section 24 of the U.S. Housing Act of 1937. The new legislation under which HOPE VI was finally authorized, the Quality Housing and Work Responsibility Act of 1998 (or QHWRA), rewrote Section 24 and fully excused the HOPE VI program from the requirement of one-for-one unit replacement. This would become important as the program moved from the commission's original focus on assisting residents toward an emphasis on increasing rental profits at public housing sites.

Diagnosing Housing Distress

When you think about public housing developments that anyone would deem beyond saving, you probably imagine isolated high rises with broken elevators and dim, dirty hallways. In the six decades since the federal government first provided for the establishment of public housing in the Housing Act of 1937—at the time, aimed primarily at veterans and those working in government jobs programs—some developments had certainly become "severely distressed." But the vast majority of public housing was not in such sad condition. In fact, garden-style apartments make up over one-third of all public housing, with another quarter in the form of single-family houses. In 1999, HUD Secretary Andrew Cuomo delivered the results of a few national surveys of public housing to a group of residents. He reported that 85% of PHAs passed a required inspection of developments measuring quality of units, and, of 87,000 residents surveyed, nearly 80% thought their housing was in good condition. He also called public housing a precious commodity that needed to be saved because no new developments were in the pipeline; he emphasized that buildings should be preserved "unless overwhelming evidence showed that the only thing to do was to demolish them."

From the beginning, though, HOPE VI gave housing authorities a lot of discretion in deciding which developments counted as severely distressed. Have all the units PHAs have slated for demolition genuinely fallen into this category? Not according to the numbers. In HOPE VI's first eight years, the program funded the demolition of 100,000 units, and another 35,000 are currently slated for demolition. This obviously exceeds the 86,000 units the NCSDPH had identified as severely distressed. Housing advocates claim that PHAs have boarded up viable units and left sites in disrepair just to justify demolition, or have chosen sites for demolition that are on valuable, sometimes newly gentrifying land—near downtown areas or pricey waterfronts. In many cases, the units being demolished could be refurbished for the same cost, but local political pressure to free up prime real estate for market-rate development has led to the loss of units. As one Boston legal advocate characterized it, "PHA's can only get money from the HOPE VI program, so they go in that direction and follow the money and start to demolish people's homes."

And what about building replacement units? While 135,000 units are being demolished nationwide, only about 60,000 units have been or are slated to be revitalized or constructed. Even this figure overstates the availability of replacement housing. Under HOPE VI, housing authorities are mandated to use the federal grants to leverage private investment dollars for new construction. And they are encouraged to build mixed-income developments (which are the only kind private developers would be willing to invest in anyway). This means that while some units in the new buildings are subsidized (which typically means the rent is set at 30% of a tenant's income), the remaining units are either rented at market rates or else sold as condominiums.

In combination with the end of the requirement for one-to-one replacement of demolished units, this policy has resulted in the replacement of only about one affordable unit for every five destroyed! Let's look at the figures for FY 1998. That year, 11,538 units were scheduled for demolition; 5,541 were scheduled for construction. At the 90% nationwide public-housing occupancy rate, those 11,538 units would have housed about 10,000 low-income families. In the new mixed-income developments, typically one-third of the units are subsidized—about 1,850 out of 5,541. So, 10,000 families displaced, but only 1,850 re-housed—at best a five-to-one ratio.

In 1999, HUD Deputy Assistant Secretary for HOPE VI Elinor Bacon used Techwood in Atlanta as an example of a model HOPE VI project. The "old" Techwood was the site of the earliest federal public housing in the nation; she described the "new" Techwood, now known as Centennial Place, as a "beautified neighborhood that removed the stigma of public housing" by housing tenants with below-poverty-level incomes of $3,500 per year next to people making 41 times their salaries. That may have been true, but as always, the devil is in the details. All of Techwood's 1,081 units were demolished; 360 were replaced on site, but only 20% of these, or about 72, were reserved for those lowest-income residents. (Additionally, 422 Section 8 vouchers were provided to former residents.) In Los Angeles, at Pico Aliso, of 577 units, 481 were demolished with 265 replaced. There, replacement units included 39 homes built for sale, ten of which were set aside for public housing residents making 50% of the median income—out of reach entirely for the lowest-income residents.

A Profitable Cure

Naturally, developers have come to embrace the HOPE VI program, especially as it has allowed them to develop prime real estate. There are coveted hills with coastal views in San Francisco (Westpoint), sites in the shadow of downtown in Los Angeles and Charlotte (Pico Aliso and First Ward), popular waterfronts in Boston and Baltimore (Clippership and Flag House Court), all slated for these new, mixed-income developments. Residents rightfully question how these sites get deemed "severely distressed" practically overnight. The Clippership development in East Boston, for example, was called a "jewel" of public housing by the local housing authority administrator only two years before the housing authority sought HOPE VI funding to demolish it, characterizing it as severely distressed. Says one account, "According to the residents, Clippership did not suddenly become 'severely distressed.' Rather, East Boston's real estate boom prompted the BHA [Boston Housing Authority] to realize that the real 'jewel' of Clippership was not its tight-knit and safe community, but rather the land under the townhouses, with its spectacular harbor views." One developer in Chicago, Dan McLean, actually prepared for eventual development of a prime HOPE VI site by purchasing and developing the land surrounding a distressed public-housing development even before the housing authority applied for HOPE VI funds. Some private developers are critical of HOPE VI's mixed-use income requirements, but for reasons different from the former residents'—Corcoran Jennison Companies in Boston, for example, has complained that the mandated ratio of low-income units is too high.

In spite of their mission to house the poorest Americans, housing authorities, too, are happy to build more mixed-income developments. For one thing, depending on the arrangement they have with their private-sector "partners," they can derive income from selling newly-built units or from selling the land on which they're to be built. Furthermore, subsidized units are rented at 30% of the tenant family's income. So, a housing authority can up its revenues by displacing lots of very low-income families from demolished buildings, then renting the much smaller number of replacement units to a select group of families with higher-than-average (although still low) incomes.

There is an important political angle to all of this as well. Programs for the poor rarely have much political appeal, and public housing is no exception. In Congress and in the White House, among both Democrats and Republicans, promoting the "American dream" of homeownership has become the favored approach to housing policy. Ironically, the largest housing subsidy in the nation already goes to support homeownership in the form of assorted tax breaks, to the tune of nearly $100 billion. As structured, HOPE VI now shifts public-housing funding into the construction of houses and condos, many of which will be sold at market rates.

Social "Ills"

Politicians appreciate the political appeal of highlighting home ownership, but that's not the only explanation for the sea-change in public housing policy from housing the poor toward promoting mixed-income developments. Since its beginnings in the 1930s, public housing has had an underlying social welfare intent. That intent has changed from housing for workers, to housing for war vets, to housing the poor. But perhaps the most recognizable stereotypes of public-housing residents have taken shape in the last 40 years. Beginning in the 1960's, when urban renewal (a.k.a "Negro Removal") became the preferred method for clearing slums, public housing has become a code word for housing for (usually) people of color who possess undesirable social characteristics.

In the 1980s, sociologists like William Julius Wilson began suggesting that the "concentration effect" of public housing discouraged contact between the urban poor and people with higher incomes, who represented stability and desirable social and economic values. Wilson himself emphasized economic factors, like deindustrialization, that were creating islands of extreme urban poverty. But translated into simplistic political slogans, the theory reinforced negative stereotypes of public-housing residents; its focus shifted to emphasizing the value of mere contact between the urban poor and people with higher incomes. In other words, those people in the projects were poor (and poorly behaved) because they had not been exposed to the morally-superior influence of their economic betters. The obvious solution was to replace traditional public housing with mixed-income developments.

Of course, racial segregation in housing is a real cause of the poor living conditions that persist in some public housing—more than any "undesirable social characteristics" of residents that the state may or may not be able to define. The many public-housing developments in black neighborhoods have never been the beneficiaries of much government largesse. Nonetheless, residents came to be blamed for blighted developments even when poor design, housing authority mismanagement, lack of funds, and local urban economic factors provided more than sufficient explanation for their condition.

But the "concentration of poverty" analysis fit better with the new agenda at HUD. In 1997, when Congress began debating QHWRA and the repeal of the requirement for one-to-one replacement, PHAs seeking HOPE VI funds were already on the way to justifying mixed-income development, privatization and developer profit. Construction of more market-rate units comported with the new goals of HOPE VI: fostering income diversity and placing homeowners and renters side by side. It was easy for both PHAs (requiring higher rents to meet operating costs) and private developers (seeing an opportunity for increased profits) to embrace the sociological studies that supported the theory of mixed-income developments. Of course, few observers questioned why the poor were expected to give up their homes, but not middle-class suburbanites!

Band-Aid Solution?

Recognizing that the goals of introducing diversity and minimizing density would result in fewer units, HUD attempted to make up some of the difference (and provide local PHAs a measure of flexibility) by implementing the voucher program established in the QHWRA. Like the longtime Section 8 certificates with which they're now merged, these vouchers allow eligible families to rent private apartments at a subsidized rate: the housing authority pays the difference between what the family pays (30% of its income) and the actual rent, up to a set limit that varies by location and apartment size.

Vouchers are a popular choice for housing authorities for at least two reasons. First, they may be used anywhere in the country, regardless of which housing authority issued them. Thus, low-income tenants can be handed a voucher and "encouraged" to leave town. Second, because of the formula HUD uses to set the payment standard for vouchers, they are likely to cost a housing authority a lot less than the market-rate units they're replacing will bring in. The payment standard is 90% to 110% of the "fair market rent," which in turn is set at the 40th or 50th percentile of rents throughout the housing authority's jurisdiction. For example, a Detroit resident who was displaced from public housing might receive a voucher for $538 a month (90% of the 50th percentile amount of $598) for a one-bedroom apartment. But this voucher would not permit her to rent near a HOPE VI site where a one-bedroom might go for as much as $800. The availability of vouchers has allowed PHAs to construct fewer replacement units at sites developed under HOPE VI by sending (former) residents to other, probably poorer, areas with voucher in hand. For every $500 paid out in vouchers, a PHA might take in twice as much from a market-rate rental. The result is often a reconcentration of public housing residents in the most low-income neighborhoods—so much for "deconcentrating the urban poor."

Can the Patient Be Saved? Should It?

In 1998, after vociferous resident and advocate opposition to demolition and displacement, HUD provided guidance that clarified the role of residents in the HOPE VI process. It required PHAs to listen to the recommendations of affected residents with "collaboration, inclusion, communication and participation." This does not take into account, though, that many affected residents would not be able to return to the new housing, leaving little incentive for most to participate! PHAs seeking HOPE VI funding are also required to involve residents in the site selection and design process. However, some opponents claim the process is often corrupted by housing authority officials who guarantee housing in the new developments to participating residents who have supported the PHA's grant application.

Unfortunately, HUD has often failed to enforce the resident-participation requirement or to ensure that housing authorities demolish only that housing that meets its own definition of "severely distressed." HUD is not alone; its accommodating approach is part of a general trend toward government deregulation. And deregulation has engendered fear among poor residents and public-housing advocates about the removal of federal policy safeguards that were often enacted after careful research showed systemic abuses by local housing authorities. For example, in its hands-off approach to the oversight of HOPE VI, HUD is not even in a position to determine whether PHAs have permitted displaced residents to return to renovated sites because it has failed to implement resident follow-up and reporting requirements.

Active residents and advocates from public housing sites across the country have organized to oppose HOPE VI at their developments. They have used methods from civil disobedience to press conferences to flexing power through the ballot box. They have created coalitions and taken legal action to block demolition in cities too numerous to list. While they have not always been successful, they have sometimes managed to delay demolitions, get concessions such as one-for-one replacement, and bring renewed political attention to the impact of the program.

In Los Angeles, legal aid attorneys helped residents block demolition of the Dana Strand development after housing authority agents tried to dissuade residents from participating in HOPE VI informational meetings. They were also assisted by their local representative in Congress, Juanita Millender-McDonald. All these efforts did not, however, stop the PHA from submitting another HOPE VI application in the next round, which was accepted and implemented with all 389 units slated for demolition.

In San Francisco, three years of resident and advocate participation, activism and organization achieved guarantees from the San Francisco Housing Authority for one-for-one replacement in HOPE VI projects. In Stamford, Connecticut, a coalition of public housing residents and advocates, including the AFL-CIO, legal aid and clergy, achieved a mandate of one-for-one replacement. With extensive resident organizing and negotiations with the city, Ordinance 966—the One-for-One Housing Replacement Ordinance—was passed there in October 1991. Similar guarantees were achieved in Kansas City and Seattle. But to many, it just seems like a lot of work to make the program actually work for them.

Still Hopeful or Just Sick?

Funding for the HOPE VI program is scheduled to end with HUD's 2004 budget. The Senate has called for appropriations through September 2004 with nearly $600 million in continued funding, and the House is also considering maintaining the program. But is it worth saving?

With a vague and changing mandate, HOPE VI has strayed from its initial intent of rehabilitating 6% of the nation's public housing stock; instead, it has funded the demolition of housing which was often decent, just in the wrong—too desirable—place at the wrong time. It has displaced many thousands of poor families to meet the demands of private developers. As one resident in Los Angeles said, "This is my home. I don't want to leave. They keep saying how bad it is, but they don't live here. They don't know."

Sabrina L. Williams is the executive director of home&community, inc. in Los Angeles. Her background includes work in architecture, law and urban planning.

RESOURCES Joseph E. Corcoran, "Making Mixed-Income Housing Work," Multi Family Developments, Urban Land Institute/National Association of Home Builders, Summer 2002; Susan Vanhorenbeck, "HOPE VI: Revitalization of Severely Distressed Public Housing," Congressional Research Service, June 8, 1998; Harry J. Wexler, "HOPE VI: Market Means/Public Ends—The Goals, Strategies, and Midterm Lessons of HUD's Urban Revitalization Demonstration Program," Journal of Affordable Housing 10:3 (Spring 2001) pp. 195-233; "Los Angeles Residents Stop Demolition in Its Tracks," Housing Matters, May 2000; "The Final Report of the National Commission on Severely Distressed Public Housing," August 1992. "When Hope Falls Short: HOPE VI, Accountability, and the Privatization of Public Housing," Harvard Law Review, 116:5 (March 2003).